Here comes more proof that green buildings make sense – dollars and sense in fact. This time a study by the University of San Diego and CB Richard Ellis Group, found that tenants in green buildings experience increased productivity and fewer sick days, and that green buildings have lower vacancy and higher rental rates.
On the financial front in terms of rents and sales values, that’s exactly what Nils Kok, a professor at the University of Berkley, California and at Maastricht University in The Netherlands, found and presented to the Australian Property Institute and Australian Direct Property Investment Association, with his study, Doing Well By Doing Good. Energy efficient buildings were worth 17 to 18 per cent more than inefficient building and they earned 6 per cent more in effective rents, he said. [See our report https://thefifthestate.com.au/archives/7633]
Now preliminary findings from the latest report, Do Green Buildings Make Dollars and Sense? overseen by Dr Norm Miller, academic director and professor at the University of San Diego’s Burnham-Moores Center for Real Estate, in collaboration with CBRE’s national director of sustainability, Dave Pogue, and Ray Wong, CBRE’s director of Americas research, has found that green buildings are more productive.
According to the research, which will be published later this year, green buildings are more productive on two measures:
The average number of tenant sick days and the self-reported productivity change. “Respondents reported an average of 2.88 fewer sick days in their current green office versus their previous non-green office, and about 55 per cent of respondents indicated that employee productivity had improved,” the report said.
This equated to a net impact of nearly $53.82 a sq m [$5.00 a sq ft] occupied, and the increase in productivity translated into a net impact of about $215.28 a sq m [$20 a sq ft] occupied, based on the average tenant salary, an office space of 23.23 square metres [250 square feet] per worker and 250 workdays a year.
“The study additionally showed that green buildings have 3.5 per cent lower vacancy rates and 13 per cent higher rental rates than the market,” CBRE’s Dave Pogue said.
“The results of this project are beginning to demonstrate the very real and positive impact of sustainable buildings for both our owners and tenant occupants. We have been seeking ways to make an empirical case for the economic benefits of sustainable practices and the results of this study exceeded our expectations,” he continued.
Mr Pogue said the research involved a survey of 154 buildings under CBRE’s management, totalling more than 5.35 million sq m of (51.6 million sq ft) and housing 3000 tenants in 10 markets across the US.
“The study defined a green building as those with LEED certification at any level or those that bear the EPA ENERGY STAR ® label. All of the ENERGY STAR ® buildings in the survey group had been awarded that label since 2008. Most of the buildings included in the research had also adopted other sustainable practices like recycling, green cleaning and water conservation.”
Dr Miller said: “This is an exciting time for the commercial real estate industry where great values and great investment upgrade opportunities coexist. This window won’t last forever.
“We have now confirmed in this and other studies that green features and energy savings pays off. Tenants care about healthy energy efficient buildings. We also know that green leases and managing to a new and higher standard will soon become the norm. Commercial real estate players have no choice but to learn how to be better in a sustainable way. We know the economics of green will drive the market, not altruism or concern about global warming,”
The report also said:
- 18 per of tenants are willing to pay more for green space
- 61 per cent of tenants believe healthy indoor environments positively impact staff retention
- 70 per cent believe it impacts positively on client image
- 71 per cent felt that green lease provisions are increasingly important
- Each additional point of ENERGY STAR ® rating saved 0.8-1.0 per cent in electricity
- Separate metering yielded a 21 per cent energy savings, more than any other factor.
These findings are generally consistent with other research on this topic, which has determined buildings with the ENERGY STAR ® label, LEED certification or other identified sustainable programs generally perform better.
The Fifth Estate – sustainable property news